In the 73rd episode of his Diamond Analytics podcast, Paul Zimnisky welcomes Tom Moses, Executive Vice President of the Gemological Institute of America (GIA)who reflects on nearly five decades of observing the diamond industry. In what he describes as a “unique, but not unprecedented” situation, Tom Moses analyzes the current state of the market, from the impact of U.S. tariffs and stock levels to the rise of lab-grown diamonds and GIA’s recent decisions regarding the latter.
The full podcast can be found at the end of the article.
Tom Moses joined GIA in 1977. His lengthy experience allows him to share insights into past crises faced by natural diamonds and to put them in perspective compared to the current situation. The 1970s were a boom period for natural diamonds, seen as an investment vehicle at the time. Carat prices approached $63,000, but the bubble burst in 1980, with prices plummeting to $10,000.
The current crisis has both structural and cyclical causes. The diamond market is experiencing a downtrend for several reasons, including Covid, inflation, weak Chinese demand, the influx of lab-grown diamonds, and more recently, US tariffs.
Regarding the latter, the impact on final prices in the US has proved to be only around 10%. That may be negligible for lab-grown diamond jewelry, but it poses more challenges for jewelry set with natural diamonds. Tariff increases have also triggered another negative effect: stockpiling in the US market, which risks slowing orders over the next 4–6 months.
An Unprecedented Transition
In retail, natural diamond prices have remained historically low, sometimes 50% below 2022 levels. According to Moses, this could stimulate demand among affluent customers, even if it doesn’t convey a particularly positive message. While lab-grown diamonds are cannibalizing market share, this seems to be primarily among more modest customers seeking alternatives (e.g., $100 rings from Walmart, with prices expected to continue falling). Lab-grown diamonds are dominating the US market, but some retailers are beginning to return to natural diamonds due to shrinking margins. Natural diamonds continue to hold strong emotional and sentimental value for wealthy customers, especially when marking life milestones such as weddings, anniversaries and celebrations. The industry’s ability to communicate the emotional and symbolic value of natural diamonds is therefore crucial.
“The diamond industry is resilient, but it must adapt to a new reality where geopolitics, technology and economics intertwine. The challenge is not only commercial, but cultural,” notes Tom Moses.
The Major Risk: Loss of Trust
However, the danger remains, and the greatest risk – loss of customer trust and confusion – lies far beyond the numbers. Much of the public remains poorly informed about the fundamental differences between natural and lab-grown diamonds. Manufacturers of the latter claim they are the same product, which creates doubt and undermines natural diamonds, even though there are very real differences. Every natural diamond is “a fragment of Earth’s geological history,” sometimes more than 4 billion years old. This symbolic, scientific and emotional dimension gives natural diamonds their unique aura.
Lab-grown gemstones such as sapphires and rubies have existed for a long time, but they are not well represented in jewelry. It is still too early to draw firm conclusions about lab-grown diamonds, which appear to be carving out a niche more in fashion, while also finding profitable outlets in high-tech.
GIA Adjusts Its Approach To Lab-grown Diamonds
GIA has developed sophisticated detection tools to reliably distinguish the two types of diamonds, based on crystal structure and atomic impurities.
Other tools exist for use directly at the point of sale, such as De Beers’ DiamondProof device. Tom Moses regrets that it is still little used by retailers, even though the device could reassure customers by allowing them to verify a stone’s authenticity in person.
When it comes to reporting, GIA is also revising its certification strategy. Lab-grown diamonds account for about 10 million carats per year, mainly from India and China. By comparison, 100 million carats of natural diamonds are mined, of which only 40% are gem quality. This contrast shows how quickly lab-grown supply can flood the market. To address the potential confusion between the two types of stones, starting in October GIA will tighten its evaluation procedure by applying less detailed, more streamlined criteria for lab-grown diamonds. This initiative aims to better distinguish between the two categories and combat the disinformation that unfortunately is even circulating among retailers. However, to recover sustainably, the natural diamond industry will need to rely on transparency, education and better storytelling.
“It is up to the natural diamond sector to rekindle desire,” concludes Tom Moses.
Listen to the podcast HERE
Source: Paul Zimnisky